On the campaign trail, President Obama pledged to bring fairness and openness to the federal government.
Apparently, he’s also brought PR spin.
Last night, I participated in a conference call for media “on deep background with Administration officials” (they actually tell you on the call that you have to refer to it as such) about the Department of the Treasury’s infusion of capital into GMAC LLC. One of the reporters on the call asked the administration officials whether the federal government would dictate the terms of the loans GMAC would make. For example, would the government specify what rate they would charge Chrysler dealers for floorplan financing?
The administration official replied that it would not. Rather, GMAC would lend with its “fiduciary duties” in mind and make loans in its best interest. The administration official then went on to tout GMAC as being “really good” at making auto loans, and how the administration could rely on GMAC to lend smartly.
Welcome to the Obama administration spin zone. If GMAC was as good a lender as the administration officials say it is, it wouldn’t touch a Chrysler floorplan deal today, particularly if the dealer’s business was comprised of more than 50% new car sales. There’s not a lender out there now that wants to take on a Chrysler floorplan risk – a sentiment clearly voiced at our Auto Finance Risk Summit this week. To present the lending GMAC will do in place of Chrysler Financial as “good business” on the part of GMAC is absurd. GMAC is operating at the behest of the federal government, plain and simple. The additional Tarp capital it is receiving mirrors the make-good capital infusions Bank of America Corp. got after it was laden with Merrill Lynch & Co. To call this anything else is just PR spin.
Personally, I think the Obama administration’s “spin” is, in fact, a disservice to GMAC. GMAC has worked hard over the last six to nine months to rejuvenate and revitalize its risk management apparatus. GMAC doesn’t deserve to be tarred with the badge of “prudent lending” when at least some of its Chrysler Financial-related activities are anything but that. Rather, GMAC is taking one for the team, and that is the badge GMAC should wear with pride.
